ETF Round Up: Insights from Etienne Joncas-Bouchard

ETF demand reaches new heights

The Canadian ETF market continues to grow at a remarkable pace, with inflows reaching nearly $55 billion by mid-year. This momentum reflects a broader investor shift toward diversified, cost-effective investment vehicles that can adapt to changing market conditions.

Fidelity has been a key contributor to this growth, adding over $5 billion in net new ETF assets year-to-date. In June alone, the firm saw slightly more than $1 billion in inflows, placing it among the top ETF providers in Canada for the month.

Canadian ETF industry trends – Asset class - Net flows ($M)

Fidelity All-in-One ETFs gain traction

Approximately 75% of Fidelity’s total ETF inflows in June were directed into its All-in-One ETF portfolios.  These solutions are designed to offer broad diversification across geographies, asset classes and investment styles, all within a single ticker.

Rather than focusing on cost leadership, Fidelity has prioritized product differentiation. These portfolios incorporate a mix of factor-based strategies and select active components, such as a global small-cap mandate, to help investors manage risk and pursue long-term outcomes.

Factor investing at the core

Fidelity’s All-in-One ETFs are built around four key equity factors: momentum, value, quality and low volatility. Each factor is considered in the portfolio design, which aims to manage concentration risk and potentially smooth out performance across different market environments.

This structure has proven useful during periods of volatility. For instance, when momentum lagged during certain phases of the year, other factors like low volatility and value helped offset the impact. The goal isn’t to time styles, but to maintain consistent exposure that can adapt to evolving conditions.

Shifting toward global diversification

Investor preferences are also shifting away from sector-specific ETFs and toward globally diversified solutions. Fidelity has seen increased demand for its international equity offerings, particularly FCIN - Fidelity All-International Equity ETF.

This ETF applies the same factor-based approach used in the All-in-One portfolios but focuses exclusively on developed international markets. These markets tend to be less concentrated and more inefficient than U.S. markets, which can create opportunities for active share and differentiated performance.

Fidelity All-International Equity ETF - Portfolio construction and Fund overview

Objective: Fidelity All-International Equity ETF aims to achieve capital growth through total returns by using a strategic equity allocation approach. It invests primarily in the Underlying Fidelity ETFs that provide exposure to a diversified portfolio of international equity securities.

Investment approach and asset allocation: Broad equity market exposure through strategic allocation to the region-specific underlying Fidelity Equity Factor ETFs. Targeted 25% allocation to the underlying equity factor ETFs: Fidelity International High Quality ETF, Fidelity International Value ETF, Fidelity International Low Volatility ETF and Fidelity international Momentum ETF.

Rationale: Can offer a core equity portfolio with strategic diversification among investment factors, with potential for higher risk-adjusted returns for investors.

Benchmark: MSCI EAFE Intex

Rebalancing: Annual

Performance through market cycles

Since launching the All-in-One suite in 2021, Fidelity has navigated a wide range of market conditions, from post-pandemic rallies to inflation-driven volatility. The portfolios are designed to capture approximately 80–85% of downside and 95% of upside relative to global benchmarks, offering a balanced approach to risk and return.

Importantly, these results have been achieved without an overweight to the U.S. mega-cap tech stocks that have dominated headlines. Instead, performance has come from a variety of sources, including factor rotation, small-cap exposure and a modest allocation to digital assets.

Learn more about Fidelity’s All-in-One suite performance - Price & Performance

Final thoughts